HOW DOES THE REAL ESTATE AUCTION WORK?
When an owner retains the services of an auction marketing company the auction company strips away all the mystery and usually boils it down to three segments: 1)listing, 2)selling, 3)closing
1. LISTING: First it should be understood that the listing for an auction sale of property is exclusive with the auctioneer/broker and that this period runs from the time of the signing of the listing agreement through 60 days after the auction sale has been completed. During the listing period the owner provides the auctioneer with all the pertinient documents and factual information concerned with the property that is for sale to permit the auctioneer to begin to create the auction marketing program that will entice the buyers to bid on the property. Documents such as deeds, latest tax assessments, outstanding mortgages and liens, certificates of occupancy, surveys, leases, rental agreements, and other related documents necessary to present a clear legal picture of the property for sale. Next the owner should provide any and all history on the property as attached to the property such as landmarked property declarations. Once all documents are received by the auctioneer a series of photos of the property will be taken in order to create the actual marketing materials for the sale and to provide for internet presence. Simultaneously with that the owner will be expected to clean up the property to provide “good curb appeal” and “interior selling presence”. The better it looks the higher the potential seeling price.
2. SELLING: The second segment or the selling period starts with placing auction sale signs on the property and nearby community, fact sheets and photos on the internet, and the creation and mailing of color advertising materials to the bidding public. During this period the advertising will be conducted in all appropriate media to market the property to the target audiences. Two previews of the property will be held as open house examination times. Also during this period all interested parties are encouraged to have engineers inspect the property so that they know what the condition of the property is prior to going into the actual auction bidding process. The open houses last for approximately 2 hours each and that is the last inspection period for the property by the public. The viewing restrictions are used to prevent an influx of tire kicking Sunday viewing curiosity seekers and to invite only those interested buyers to examine the property. The auctioneer is only interested in those prequalified ready, willing, and able buyers to see the property. Also during this period the potential buyers are supplied with all documents necessary to perform due diligence for the property including but not limited to the “terms and conditions of sale”, the “contract for sale and purchase” and other pertinent documents necessary for the bidder to review prior to the auction day. The seller is also encouraged to contact any potential buyer they may know to come to the auction previews to broaden the buying audience. The day of the auction the auction team arrives sets up their registration table, clerking and bookeeping stations and register any final bidders that show up. During this period the potential buyers have one last chance to examine the property prior to beginning the auction. The auction begins at 12 in the high noon and is over in about 5 minutes. On conclusion of the auction the successful bidder and under bidder are invited to the table to sign contracts and left bid documents as well as their irrevocable deposits.
3. CLOSING: The final period in the auction process is closing. This period also goes with a pre set schedule of events to make certain that all parties are on the same page and moving towards an expeditious closing of the property and transfer of deed. The closing usually occurs within 30 days after the sale but in some instances can take as long as 45 days due to the need to provide a clear and unencumbered title for transfer. It is necessary for the seller to maintain all property insurances during this period until the closing is completed successfully.